WASHINGTON – As the US Air Force seeks to replace the Minuteman III ICBMs with a new wave of nuclear weapons that will last until 2075, the Pentagon is struggling to get a handle on just how much the new Ground Based Strategic Deterrent (GBSD) will cost.

The program is still years away from production, with Lockheed Martin, Northrop Grumman and Boeing having just submitted their proposals to win a pair of 36-month technology maturation and risk-reduction contracts that would be awarded at end of 2017.

But with the Pentagon staring down a massive "bow-wave" of program costs in the early 2020s, much of it driven by the recapitalization of the nuclear triad, getting a handle on GBSD's cost early could prove key to keeping the department's modernization priorities on track.

And right now, there are disagreements about just what that program will cost.

The Air Force has set an initial cost estimate of $62.3 billion for the GBSD program, but news reports pegged the estimate from the Pentagon's office of Cost Assessment and Program Evaluation (CAPE) as coming in between $85-$100 billion. That $85 billion figure is reportedly what Frank Kendall, the Pentagon's top acquisition official, set as the baseline cost for the program.

In an exclusive interview with Defense News, CAPE head Jamie Morin said his office had access to "different data" than the Air Force, including additional production information from the Ground Based Interceptor program.

"They used a blended model that looked at strategic launch vehicles from 1960 to I think about 1990. So capturing Peacekeeper and capturing Minuteman and capturing Poseidon for the Navy, Trident for the Navy, and the initial Trident II, I believe," Morin explained Oct. 18. "So a lot of data, but very old. The newest data is 25 years old. So it turns out there has been cost increases in a lot of the segments, a lot of the industries that we are talking about here from the 1990s to present. So we are introducing some of the more current stuff tended to push our estimate up.

"The CAPE and the Air Force estimates are pretty close on a lot of the supporting infrastructure. I wouldn't describe either the CAPE or the Air Force estimates for the supporting structure as high confidence, but they are comparatively a smaller share of the cost," Morin added. "The biggest differences are in production and development of the space system, of the launch system in terms of absolute dollars. There are some areas of high percentage difference, but they tend to be on smaller dollar things. They don't move the aggregate."

Labor Cost Uncertainty

Morin said the reported range of $85-$100 billion is "not widely off" from CAPE’s estimate. Asked why that estimate has such wiggle room, Morin again pointed to the question of labor rates as the "biggest single driver" of that range. Labor rates have grown significantly above inflation in the satellite and space industry in the last few decades. As a result, costs might shoot up on the program in the coming years.

Byron Callan, an industry analyst with Capital Alpha Partners, said that labor argument makes sense to him, noting "it’s an aging workforce and it may entail new hires. That green labor could explain a lot. The people who last built Minuteman, M/X or Trident are retired or dead."

However, any estimate made now comes with a lot of uncertainty, given the early stage the program is at, as well as the fact that there is "very, very little" information available on production of rocket systems thanks to a decision in the late 1990s not collect certain streams of data from contractors, Morin cautioned.

"With a system like GBSD where we are going to be buying several hundred missiles, not having good insight into production costs is very disadvantageous for the government," Morin said. "So I would characterize all of the estimates in this area as lower fidelity than we would like. It’s unavoidable now because we just didn’t make those choices to collect that data ten or 20 years ago."

Throughout the interview, Morin stressed that the program is still so early that changes in the program’s cost are inevitable.

"We are not going to get a lot of insight near term because of what we are out with a [request for proposal] for is development and different kind of work than the ultimate construction," he said. "We will continually reassess the program, but people shouldn’t expect that in 12 months or some modest period of time like that, you are actually going to have the answers to questions like ‘how are you going to construct the missiles that you haven’t even designed yet?"

And some costs will come down due to quantity, Morin said, noting that "you are talking several hundred [missiles] which is a much bigger number for procurement than GBI. So there should be efficiencies there. We modeled those. Hopefully, we modeled them too conservatively. We can do better than that. All of those will have to be worked in execution of the programs over the next decade."

Those in the nonproliferation community opposed to the ICBM replacement have pointed to the cost uncertainty as a sign that the GBSD program needs to be rethought. Kingston Reif of the Arms Control Association calls the ICBM the "least valuable triad leg" and sees the price tag as a potential weakness for the program’s future.

"The GBSD program is unsustainable, given the projected costs and other service and Pentagon priorities, and unnecessary given the United States has and is planning to retain more nuclear weapons than it needs for its security," Reif said. "The high end of the CAPE estimate for GBSD is in B-21 and Columbia class cost territory. At that price tag I think it is unlikely that there will be a GBSD program. Even $85 billion will be a major challenge."

Commonality Request

Savings can come from another focus area for the program – commonality with other missile programs.

Kendall told reporters Oct. 22 that the Pentagon is "looking for some commonality between that system and the weapon system that the Navy's developed for the SSBNs. It's not going to be 100 percent. We've looked – that's not practical."

Where commonality can be used will be driven, in part, by the three companies competing to produce the GBSD program, he added.

"Where they have a case for that, they'll propose it, but where there is a case to do something new that might be less expensive or even more capable, then they can propose that," Kendall said. "So we use a competitive process to try to get that, to get the right balance between commonality and a distinct, different product."

In September, two top nuclear officials – Vice Adm. Terry Benedict, director of the Navy Strategic Systems Programs (SSP), and the Air Force’s Lt. Gen. Jack Weinstein, deputy chief of staff for strategic deterrence and nuclear integration – offered some clarity on what those commonality efforts may entail.

Benedict said the two services ran a series of efforts over the last 12-18 months to find potential commonalities, including with the Trident weapon, while Weinstein said the Air Force is looking to find "smart commonality" that makes sense for the long-term of GBSD.

"We also have to look at the ground based interceptors and the commonality that can come from the ground based interceptors, and also the commonality that can come from space systems," Weinstein said. "What we need to do is, we need to deliver a system that meets requirements, reducing risk in the program, and is cost effective for the American taxpayers. We believe as we laid out our smart commonality approach, we look across the breadth that is provided in strategic system at large, we are definitely in line in supporting that commonalty approach."

Requirements for Industry

Lockheed Martin, Boeing and Northrop Grumman all submitted their applications for the GBSD TMMR competition by the Oct. 12 deadline. While the competitors have largely declined to go into major detail about their offerings (although all three cite previous experience working on various aspects of the Minuteman III program as a selling point), some details have emerged.

An artist rendering of Boeing's GBSD offering.

Photo Credit: Boeing Defense, Space & Security

One aspect is that the Air Force is open to mobile command and control solution. John Karas, Lockheed Martin vice president and GBSD program manager, told reporters Oct. 13 that factors into the survivability analysis the company did when putting together its bid.

"We traded off the [concept of operations] for mobile sites. I think the main driver is the survivability analysis, which was rather lengthy and complex, so we’re trying to provide the right blend of fixed sites and reduce the number of sites to help reduce the [operation and sustainment] costs but maintain all the survivability."

Carol Erikson, vice president and GBSD program manager for Northrop Grumman, confirmed that mobile command and control is an option they looked at, although like Lockheed, declined to go into detail about how much mobile was included in their proposal.

Another survivability area of focus is in cyber hardening, said Andy Healy, Boeing’s manager of business development and strategy for GBSD. And he adds another area of interest – the government wants to own the technical baseline, in order to "control and, essentially, compete industry to get the best value for the taxpayer’s dollars."

Just how much the Air Force will own is somewhat up to the companies, Erikson noted.

"They did not prescribe a specific level. Our proposal basically gives our recommendation for the appropriate level. They’ve been pretty clear on why they want to own the technical baseline – they do not want to be dependent on a single vendor going forward," she said. "The Air Force doesn’t want to get into a situation where they are dependent on any single vendor for 50 years, so making sure that they have sufficient insight into the interfaces and are able to maintain the system without having that specific vendor dependency going forward."

When it comes to industry, another intriguing detail has emerged- that the Air Force is not willing to allow any of the competitors to lock in an engine manufacturer as their sole partner.

In a statement to Defense News, Col. Heath Collins, GBSD system program manager at the Air Force Nuclear Weapons Center, said "as part of our Request for Proposal, we put in non-exclusion language that the prime contractors cannot set up any binding contracts or relationships with key subcontractors that keep them from being able to team on other efforts."

That appears to apply in particular with potential engine companies, meaning firms such as Aerojet Rocketdyne and Orbital ATK are available for all three competitors.

As to the other partnerships, only Lockheed has revealed its teaming, which features General Dynamics, which will focus on weapon system command and control; Draper Laboratories, which will help develop the guidance navigation and control systems; Moog, to provide the cross-vector control systems; and Bechtel, to help develop the launch facilities.

Both Boeing and Northrop have confirmed they have teams in place, but declined to say with which companies.